Life After College Calls for Smart Financial Decisions

College provides a great opportunity to spread your wings and try new things. But it doesn’t take long for reality to set in once a degree is in hand. That’s especially true when it comes to finances.

You may have student loans to repay, or you may need a new car to get to and from work. And then there are those pesky living expenses to consider, like rent and food and utility bills.

Sorting through it all can be a challenge. But you can prepare yourself for what’s ahead by drafting a financial blueprint for the future. Here are some guidelines for putting together that plan:

• Brush up on personal finances. One thing you’ll quickly discover is the need to create a budget. It’s critical to get a sense of how much money you have coming in, and what you can realistically afford to spend each week or month. Maintaining a monthly or weekly budget will give you a firm grasp on your finances and help you decide where you may need to tighten things up a bit to stay financially sound. But it’s also important to establish a plan that’s practical. You don’t want to create a budget that’s so tight you can’t enjoy life’s simple pleasures. Leave a little bit of wiggle room so you can afford to go out to a nice dinner or a get a specialty coffee every once in a while without feeling guilty.

• Protect yourself with adequate medical insurance. You may be young and healthy and ready to conquer the world, but it only takes a slip on the ice or a car accident to bring you back to reality. Life is full of unexpected medical emergencies, and health insurance provides a cushion to cover the ever-increasing costs of recovery from an injury or illness.

• Establish a rainy day fund. What if you do end up in the hospital with a broken leg or lengthy illness? Will you have funds to carry you through until you can get back on your feet? Or maybe your car will conk out while you’re driving down the highway. Will you have enough money to fix it or get a new one? If you have a rainy day fund, you will.

• Avoid racking up debt. Credit cards are typically easy to get and even easier to use. But again, discipline is the key to handling credit. Put a strict limit on the number of cards you have and keep your maximum spending limit at a manageable level, say in the range of $500 to $1,000 per card. You can always increase the spending caps as you grow older and financially wiser. You should also aim to only charge what you can afford to pay each month. Paying off your full credit card balance on a monthly basis will help you to avoid costly interest charges. You don’t want to end up paying hundreds of dollars in interest over a long period of time for something that only cost $100 to begin with!

• Start saving now, and on a regular basis. Get into the habit of putting aside a portion of each paycheck in a savings account. Encourage yourself to save by setting goals, such as buying a new car or a home. And even though it might seem ludicrous to start saving now for a retirement that’s decades away, you’ll be surprised how much you can make on the money you save today. If your employer has a 401k plan, sign up right away, especially if your employer will match or partially match your contributions. And if your job doesn’t offer an employer-sponsored plan, don’t dismay! You can still save for your retirement through an Individual Retirement Account, commonly referred to as an IRA.

The more you can do now to prepare for your financial future, the better off you’ll be down the road. And remember that the financial choices you make today will follow you throughout the years. Best of luck college grad!